Hard News by Russell Brown

Power craziness

So Californians get their wish: a movie actor with no coherent policy platform is to take charge of their basket-case state. And Arnie comes in with a problem that might make the groping allegations look irrelevant.

Newly-unearthed email memos appear to show that Schwarzenegger met with the now-disgraced chief of crooked energy trader Enron, Ken Lay, two years ago. Schwarzenegger claims not to remember doing so. Should it matter anyway? Depends.

The Enron memos have been discussed in a highly colourful story by the investigative journalist Greg Palast, who claims that Schwarzenegger's candidacy was a set-up aimed at neutralising governor Gray Davis and his deputy Cruz Bustamante, who have both been seeking to recover $US9 billion in illicitly-obtained profits from Enron and other power companies:

While Bustamante's kicking Enron butt in court, the Davis Administration is simultaneously demanding that George Bush's energy regulators order the $9 billion refund. Don't hold your breath: Bush's Federal Energy Regulatory Commission is headed by a guy proposed by … Ken Lay.

But Bush's boys on the commission have a problem. The evidence against the electricity barons is rock solid: fraudulent reporting of sales transactions, megawatt "laundering," fake power delivery scheduling and straight out conspiracy (including meetings in hotel rooms).

So the Bush commissioners cook up a terrific scheme: charge the companies with conspiracy but offer them, behind closed doors, deals in which they have to pay only two cents on each dollar they filched.

Problem: the slap-on-the-wrist refunds won't sail if the Governor of California won't play along. Solution: Re-call the Governor …

The pay-off? Once Arnold is Governor, he blesses the sweetheart settlements with the power companies. When that happens, Bustamante's court cases are probably lost. There aren't many judges who will let a case go to trial to protect a state if that a governor has already allowed the matter to be "settled" by a regulatory agency.

There's a great deal of supposition in Palast's report, and it's not entirely borne out by the eight pages of internal Enron memos obtained by the Foundation for Taxpayer and Consumer Rights. Palast says he has 34 pages of memos.

On the other hand, Schwarzenegger's claim that he doesn't remember the meeting two years ago - where of 45 business leaders invited, he was one of only 11 who attended - simply lacks credibility: As Douglas Heller of the FTCR said: "You don't meet with America's most well-known corporate crook in the middle of California's biggest financial disaster and not remember."

Perhaps Arnie simply met with the crooks from Enron because he cared about the state and wanted to discuss possible solutions to the power crisis. Maybe he was flattered to be invited. But if Palast has called it right, and the energy companies get a sweetheart deal - one which couldn't happen unless he allows to happen - Arnie will be under considerable scrutiny.

So even if he can get past that, is he up to the rest of the job? Well, the actor is socially liberal, and I don't actually think he's a complete incompetent; certainly not with Warren Buffett lined up to offer financial advice. But in the course of his campaign, he set himself a far tougher task than that which proved too much for Davis.

He has promised to balance California's budget. But he has also promised to repeal Davis's rather desperate "car tax", which was to bring in $US4.2 billion in the next year - which will instantly blow out Davis's $8 billion deficit to $12 billion. About 80 per cent of the state budget can't be cut as things stand, and Schwarzenegger, in another campaign promise, further fenced off education spending. What's left? Prisons and healthcare. And he has also promised not to raise taxes. Does anybody seriously believe there are an annual $12 billion worth of inefficiencies lying around? Apparently so. It all seems quite mad, really.

Speaking of which, check out Australia's proposed anti-spam legislation, which I think would be viewed by any informed observer as stark raving bonkers - and not really an anti-spam measure at all. Get this:

The Australian government wants to exempt its own emails and those of political parties and religions from being considered spam, as well as any messages with “factual information”, albeit that they may contain added “comment” and information on the identity of the sender, including a company logo. Such “designated” messages would also be exempt from the requirement to have an “unsubscribe” facility, whereby the recipient can tell the sender not to send further similar messages.

Can we spot the loopholes there, folks? Paul Swain has suggested that New Zealand might follow Australia's lead on anti-spam legislation. No it should not. Australian attempts to regulate the Internet have a tendency to attract international derision, and this one looks more idiotic than most.

Unfortunately, the efficient function of the Internet is under threat much closer to its core. VeriSign, the company which has the monopoly contract to administer the .com and .net domains recently sought to abuse that monopoly by making a change to the functioning of the Domain Name System for its own commercial advantage. It backed after an angry letter from Icann, but appears set to try again, after it has run a PR campaign aimed at pitching its disgraceful dodge as an "innovation". I've written a Listener column on it, but until that's published, Dan Gilmor has a good story on VeriSign's arrogance, The Washington Post rounded up coverage and they're going ballistic on Slashdot.

Look, it comes down to this: the Internet is what it is because its engineering is done by engineers, and principled ones at that. Feral business people who do not grasp that crucial fact can fuck right off.

Nasty little battles seem to be warming up inside the Bush administration. In the course of the kind of interview which, regrettably, it's hard to imagine a major American publication doing, the Financial Times has discovered that Rummy wasn't told about a major change to the way the hitherto bungled reconstruction of Iraq is run. And he's supposed to be in charge. The FT story is here, and the full interview transcript is here. The Washington Post picked it up.

Top news! We're still amongst the least corrupt countries in the world, according to Transparency International, which listed Argentina, Belarus, Chile, Canada, Israel, Luxembourg, Poland, the USA, and Zimbabwe as the countries which have suffered a "noteworthy" fall from grace on its index.

More top news! A new report on life in New Zealand cities says: "The overall quality of life for most people living in New Zealand's eight largest cities is improving. Our health is getting better and education standards are increasing. Overall crime is reducing, and people's sense of safety is more positive."

And finally, what does it say about our public broadcaster's view of the asylum-seeker Ahmed Zaoui that TVNZ's online department keeps his picture in a directory called http://images.tvnz.co.nz/news/criminals/? Does Zaoui really deserve to be filed alongside Jules Mikus, Morgan Fahey and Nicolas Reekie? TVNZ may have turned off viewing-by-directory by the time you read this, but thanks to keen-eyed reader Alex Davidson for the tip.

PS: The White Stripes were simply amazing at a jam-packed St James on Tuesday night, and I hear that the Wellington show was just as good. There's a clarity and originality about them that seems undiminished by fame. I had my "back when I saw them at the King's Arms" story at hand, but there's really no need. They're still saving rock 'n' roll.